As the son of a Master Sergeant in the Air Force, I grew up in a family that had values rooted in military tradition and today I carry those with me as I craft legislation to help our veterans. As a member of the House Veterans' Affairs Committee and Ranking Member of the Economic Opportunity Subcommittee, I am uniquely positioned to usher legislation through Congress that provides our veterans with the tools they need to succeed in today's competitive economy.
Economy & Budget
President Bush and Ben Bernanke told us we needed to bail out Wall Street because we could not allow big financial institutions and insurance giants to fail because if they failed it would have led to the collapse of the U.S. and global economies.
Today, most of the huge financial institutions still standing have become even bigger -- so big that the four largest banks in America (JP Morgan Chase, Bank of America, Wells Fargo, and Citigroup) now issue one out of every two mortgages; two out of three credit cards; and hold $4 out of every $10 in bank deposits in the entire country.
Taking candy from a baby: A consortium of Chinese and American companies goes to Washington and announces plans to build a $1.5 billion windmill farm in West Texas using $450 million in U.S. Stimulus funds, which will create 2,330 jobs – 2,000 of them in China.
The baby – Washington -- doesn’t cry or whine or spit in the consortium’s face. That’s what’s really wrong with this story.
So accustomed to being bought and sold, Washington simply begins processing forms so it can hand over your tax dollars to create jobs in a turbine factory in the city of Shenyang, China at a subsidy of $193,133 each.
It’s like these bureaucrats live in Wonderland. Or an America where the unemployment rate isn’t 10.2 percent. Or where 40,000 American manufacturing facilities didn’t disappear in the past decade. Or where banks didn’t repossess nearly a quarter million American homes in the past three months.
We’ve got a message for Washington: Hell no! We’re not giving tax dollars to China. What’s wrong with these businesses and our government? It is the $787 billion American Recovery and Reinvestment Act of 2009. It’s not the Chinese Recovery and Reinvestment Act.
It’s bad enough that we’ve off-shored our factories and technology and jobs over the past 20 years. We’re not off-shoring our Stimulus cash too. In fact, we’re tired of serving as the schoolyard wimp of the world. We need our own industrial policy so we can stand up and compete in the world market manufacturing the likes of wind turbines. And we need it now.
China has an industrial policy. And it uses that policy to dominate. Here is how Keith Bradsher of the New York Times described China’s policy to become a world leader in renewable energy, which of course, would include construction of wind turbine factories:
“Calling renewable energy a strategic industry, China is trying hard to make sure that its companies dominate globally. Just as Japan and South Korea made it hard for Detroit automakers to compete in those countries – giving their own automakers time to amass economies of scale in sheltered domestic markets – China is shielding its clean energy sector while it grows to a point where it can take on the world.”
China protects its chosen industries in many ways. It provides low interest loans, some of which don’t have to be repaid. It may give free land on which to construct buildings. And there are other perks that Bradsher described:
“When the Chinese government took bids this spring for 25 large contracts to supply wind turbines, every contract was won by one of seven domestic companies. All six multinationals that submitted bids were disqualified on various technical grounds, like not providing sufficiently detailed data. . . even as Chinese companies that had never built a turbine were approved. . .”
Later, Bradsher describes European disgust at the Chinese treatment:
Some of the nation's top political commentators, legislators and intellectuals offer some insight into the biggest question burning up the blogosphere today.
What policies could Congress or the president promote that would improve America's unemployment numbers?
Rep. Keith Ellison (D-Minn.) said:
"We have to focus our attention on massive job creation, and I think we need to invest in our infrastructure. I have a bill which would basically provide 625 billion extra dollars to build our infrastructure. We also need to step back and focus on an industrial policy that will strengthen manufacturing in America."
Paul Kawika Martin, policy and political director of Peace Action, said:
One step in creating more jobs could be dealing with a bloated Pentagon budget. The U.S. spends around half of its discretionary budget on the military and nearly more than every country in the world combined. Recently, economists at the University of Massachusetts concluded that military spending creates fewer jobs than nearly any form of government activity. Their findings showed that a tax cut or investing in education, mass transit or energy efficiency would create far more jobs. Sen. John McCain (R-Ariz.) echoed these sentiments when he said that we cannot look at military spending as a jobs program right before voting to stop the F-22 jet.
Even if you believe that the current level of military spending is appropriate, you would probably agree with current and former military leaders in cutting Pentagon pork — weapons systems that benefit military contractors and congressional campaign coffers not American's security. A former Assistant Secretary of Defense under Reagan and others urge the cutting of several wasteful programs including the DDG-1000 naval destroyer and "missile defense." This would allow the United States to inject billions into higher job producing programs.
Rep. Jeff Flake (R-Ariz.) said:
"Abandon the government takeover of healthcare. That's got a lot of small businesses in particular very worried about hiring because they realize that if they support additional employees, they may be socked with a huge surtax from the healthcare bill."
Rep. Bobby Scott (D-Va.) said:
"We passed a stimulus package that is working, but working slower than I like. It's gradually reduced the number of lost jobs, but we're still losing jobs. We're headed in the right direction and making progress, but not enough. We need continued support for the stimulus package, which still has a lot of money. It was designed to pay out over two years. Economics have indicated that the stimulus package has made a huge difference in the economy."
Dean Baker, co-director of the Center for Economic and Policy Research, said:
Instead of trying to spend money to increase GDP, the government should instead pay workers to work shorter hours. The mechanism can take the form of a tax credit to employers. The government can give them a tax credit of up to $3,000 to shorten their workers’ hours while leaving their pay unchanged. The reduction in hours can take the form of paid sick days, paid family leave, shorter workweeks or longer vacations. The employer can choose the method that is best for her workers and the workplace.If take home pay is left unchanged as a result of the credit, then demand should be left unchanged. If workers are putting in fewer hours and demand is unchanged, then employers will need to hire more workers.
This logic is as simple as it gets. The process is also quick and cheap. In principle, the government can go this route to save jobs at a cost of a bit more than $20,000 per job, far less than the cost per job saved through the stimulus package. Germany has used this policy to keep its unemployment rate at 7.6 percent, about the same as it was before the recession. Imagine workers in the United States, like workers in Germany, were dealing with the recession by putting in four-day weeks (while getting paid for five) or getting an extra two weeks of paid vacation. This sure beats being unemployed.
Seventeen states already have a “work-share” program in place that allows employers to use unemployment insurance money to cover a reduction in work hours, without a corresponding reduction in pay. More than 100,000 layoffs have been prevented as result of this program. Senator Jack Reed (D-RI) has a bill that would increase funding for work-share programs and remove some of the bureaucracy. The bill also provides start-up money for the states that don’t have programs. The Reed bill would be a big step towards following the Germany model, taking advantage of a program that is already in place. It could quickly make a big dent in the unemployment rate, by preserving many of the jobs that are now being lost.
In this respect, it is important to clear up a common confusion about the economy. The monthly job growth number is a net figure. Approximately 4 million people leave their jobs every month, half involuntarily. We have job growth if we either create more than 4 million jobs or reduce the number of jobs lost below 4 million.If a work share program reduced involuntary job loss by 20 percent, or 400,000 per month, it would have the same effect as adding 400,000 new jobs. Over a full year, this would generate nearly 5 million new jobs. This would be a quick and effective way to reduce unemployment.
Glenn Reynolds of Instapundit said:
The biggest problem so far has been "regime uncertainty," as businesses forego investment and hiring because they're not sure what's happening with ever-shifting stimulus, healthcare, and carbon-tax talk. In addition, a growing sense that financial success depends more on connections than on business acumen is shifting investment into the political sphere. That's good news for lobbyists, but not so much for the economy as a whole.
Furthermore, politicized efforts to ensure that the stimulus didn't benefit white males too much mean that the money didn't go to the sectors, like construction and manufacturing, that have been shedding jobs the fastest. All in all, exactly what one would expect of a politicized economic plan from an inexperienced administration.
Simple, predictable regulations, low taxes and freedom from political pressures on capital allocation produce economic growth. Corrupt, bureaucratized, constantly-shifting regulatory regimes do not. As we've moved toward the latter, we've seen less employment. Moving back toward the former would probably fix things.
According to the National Employment Law Project, every day 7,000 additional workers are running out of unemployment benefits. That means that since the House passed its bill to extend unemployment insurance on September 22, approximately 266,000 workers have been left high and dry while the Senate continues to delay a vote on this crucial legislation—and 7,000 workers yesterday, 7,000 workers today, and 7,000 workers every day that the Senate puts off this vote are being pushed closer and closer to this brink.
The Senate bill, called the Unemployment Compensation Extension Act of 2009, H.R. 3548, would extend jobless benefits to all states for 14 weeks, with an additional six weeks for states with more than 8.5 percent unemployment, and all without adding one penny to the deficit.
Unemployment insurance is the first line of defense for jobless families in troubled times, bringing economic stability to entire communities. The current job market’s woes, however, have tested the program as never before. In fact, according to Department of Labor Statistics there is only one job for every six unemployed workers.
My district is a predominantly rural one that has been stung badly by the recent economic strife, as well as by a decade of bad trade policies that caused jobs to be shipped overseas. This tax credit incentivizes companies to bring jobs back to non-urban regions, and to renew and reward innovation by American entrepreneurs who create American jobs. Not only will this legislation spur job growth, the jobs created will be ones that belong in a 21st century economy. Teleworking is more and more common in today’s global marketplace, and numerous companies have telework centers answering calls from consumers and businesses that use their products. With the unprecedented investment in rural broadband networking in the stimulus package, the resources are increasingly available for teleworking jobs to be created in rural areas and small towns.
In the midst of the worst economic crisis since the Great Depression and with job losses and home foreclosures mounting, it's no wonder the rest of us are asking how this can be allowed to continue.
Look no further than the powerful lobbying arm of the financial services sector, which has spent at least $220 million this year lobbying Congress to stave off new rules to prevent another collapse. That is over $500,000 in lobbying for every member of Congress, which might help explain why, to date, nothing has been fixed in our porous financial regulatory system. Americans want to know when Congress will put an end to the Wall Street's secret off-book gambling schemes and restore our capitalist system by requiring real transparency and true competition.
Federal regulators looked the other way for the last 10 years as banks and other lenders aggressively marketed financial products carrying hidden costs and fees—products that crowded out responsible loans that would have been better for borrowers, but would have generated fewer fees for lenders and investors.
The hundreds of billions of taxpayer dollars currently bailing out irresponsible lenders has only partially filled the crater-sized hole left when their supposedly record profits proved to be an illusion. This bailout is the second multibillion-dollar bank bailout in twenty years and has cost far more than the savings and loan crisis of the 1990s. Let’s not let this happen a third time.
Last week the House Financial Services Committee took a big step toward fixing the failed system that allowed this to happen: It passed a bill that would create the Consumer Financial Protection Agency, which would be dedicated to providing financial safeguards for Americans. The bill now goes to the House Energy and Commerce Committee and then to the full House for a vote. It’s a strong start, though it must be strengthened before final passage.
More than any other sector of the economy, construction workers have borne the brunt of job losses. Over the last year alone, more than one million construction workers have lost their job. These losses have been fairly widespread, with new federal data out earlier this week indicating that every state except Louisiana lost construction jobs during the past twelve months. While other parts of the economy may be showing early signs of a recovery, there is little reason to believe the construction industry is approaching a turnaround.
Office, retail and condo vacancy rates are projected to increase, demand for manufacturing facilities remains in free-fall, and public investments in construction will continue to be undermined by declining state and local revenue. This of course is a problem for construction workers and companies. But with construction spending at 8 percent of U.S. gross domestic product and construction accounting for one out of every 10 manufacturing shipments in this country, the construction depression is prolonging our national recession.
The point is, you can’t fix the economy and high unemployment without fixing the construction industry. Fortunately, Congress has a unique opportunity to do just that by voting to extend the first-time homebuyer tax credit and the five-year carrbyback of net operating losses. Combined, these two measures will boost economic activity, drive demand for construction and, most important, put Americans back to work.
On Thursday, the White House responded. Kenneth Feinberg, also known as the White House “pay czar,” announced mandatory salary cuts and limits for the top executives of the largest companies still receiving government assistance through the Troubled Asset Relief Program (TARP). He gave warning that the Administration will also conduct salary reviews of other financial institutions receiving taxpayer funds.